1. Airports Company South Africa Presentation to the Portfolio Committee on Tourism 6 November 2012

2. Airport taxes 2 The term airport taxes are incorrectly used for taxes, charges and other costs recovered by way of the air ticket DescriptionExample Taxes Value Added Tax (VAT) International departure tax on regional and international departures Regulated charges ACSA passenger service charge Current - Domestic: R110, Regional: R227, International: R299 From 1 Sep – Domestic: R116, Regional: R242, International: R319 SACAA security charge Non-regulated charges ACS passenger charge (ACS is a company owned by the airlines associations) Airline costs Fuel surcharges Insurance National Treasury requires the following breakdown on air tickets:

3. South African Airport Sector The Tyranny of Distance Uncommon to have major population centres so dispersed Johannesburg-Cape Town equivalent to London-Madrid or Amsterdam-Rome Domestic routes dominated by The Golden Triangle The South African national (and regional) economy suffers from the tyranny of distance and the three airports role in ameliorating this problem cannot be underestimated Source: Mott MacDonald Ltd Analysis

4. 4 Airport Charges in Perspective Leigh Fisher benchmarking: 2011 Review of Airport Charges Based on charges effective on 31 December 2010 24 th cheapest out of 50 airports ACSA has increased charges by 69.6% since this study due to recovery over six months of an annualised 34.8% charges increase for 2011/12 Awaiting latest Leigh Fisher benchmarking A further increase of 8% became effective on 1 October 2012 Johannesburg

5. 5 Evolution of Airport Charges Introduction of pre- funding: charges reduced Economic Regulation Lacks predictability, transparency and balance between the regulated entity and the users Pre-funding introduced at commencement of major infrastructure investment in 2007 Price spikes inevitable within current framework DoT has embarked on roadmap to improve regulatory framework Price spike implication of pre- funding

6. 6 Economic Regulatory Review May 2011 amended permissionNo new capacity investments Smoothed tariff decrease 2012/132013/142014/152015/162016/172017/18 Promulgated tariff increase30.6%5.5%5.6% Indicative tariff increase based on current approach-13.4% Current changes considered for the economic regulatory framework in time for the next Tariff Application (Permission Application): Internal dispute resolution (before the regulatory decision) and Appeals mechanism (following a regulatory decision) No overlapping of Permissions – effective Permission of 5 years Improved flexibility to deal with uncertainty – Triggers required for major infrastructure investments (Planning, Design, Phase 1 construction, etc) Re-opening of Permission triggers, eg. demand growth, technological advances, regulatory compliance Certainty regarding re-opening of Permission rules Capacity of the Regulating Committee If successful – Re-assess the no new capacity assumption based on level of understanding of stakeholder expectations and the impact of key demand drivers If unsuccessful – Re-assess the no new capacity assumption based on the understanding of the change within the economic regulatory framework

7. The Real Driver of Traffic Volume Growth 7 GDP growth is a key driver for traffic volume growth

8. Enhanced connectivity - world class gateways to the country and its regions Ability to deliver improved customer service and experience Robust non-aeronautical revenue base 8 Current capacity Airport capacity is a function of peak hour capacity (based on demand) and the duration of the peak Behavioural changes within the South African aviation sector could lead to postponement of future capacity requirements, i.e. lead to the better use of current facilities

9. Airport Demographics AirportPassenger throughput (2012) Total air traffic movements (2012) Approx. Annual passenger handling capacity Public parking bays O.R. Tambo19 004 000212 58028 000 00016 300 Cape Town8 576 70997 93514 000 0006 080 King Shaka (Durban) 5 040 09455 1947 500 0004 500 Port Elizabeth1 364 97668 8932 000 000900 Bloemfontein441 95420 088600 000370 East London681 52932 5871 200 000550 George575 79933 479900 000415 Kimberley140 24812 347200 00090 Upington52 2247 826100 000100

10. 10 Departing passengers from ACSA Airports per Destination Source: ACSA – data per financial year

11. Aircraft Landings at ACSA Airports per Origin 11 Source: ACSA – data per financial year

12. 12 Thank you